Tuesday, December 18, 2012

Feted globally…

Just taking the main quote portions only from this
interesting piece for the benefits of readers:

In a confidential memorandum in December 1991,
Lawrence Summers, World Bank Chief Economist, urged his colleagues: “‘Dirty’
Industries: Just between you and me, shouldn’t the World Bank be encouraging
MORE migration of the dirty industries to the LDCs (Less Developed Countries)?
I can think of three reasons.”

Mr Summers
elaborates: “The measurement of the costs of health-impairing pollution depends
on the foregone earnings from increased morbidity and mortality. From this
point of view a given amount of health-impairing pollution should be done in
the country with the lowest cost, which will be the country with the lowest
wages. I think the economic logic behind dumping a load of toxic waste in the
lowest wage country is impeccable and we should face up to that”.

Second, he says,
“The costs of pollution are likely to be non-linear as the initial increments
of pollution probably have very low cost. I’ve always thought that
under-populated countries in Africa are vastly UNDER-polluted, their air
quality is probably vastly inefficiently low compared to Los Angeles or Mexico
City. Only the lamentable facts that so much pollution is generated by
non-tradable industries (transport, electrical generation) and that the unit
transport costs of solid waste are so high prevent world welfare enhancing
trade in air pollution and waste”. Put simply, he regrets it is not
economically possible to transfer waste and pollution wholesale to the
developing world.

Finally, he asserts,
“The demand for a clean environment for aesthetic and health reasons is likely
to have very high income elasticity. The concern over an agent that causes a
one in a million change in the odds of prostate cancer is obviously going to be
much higher in a country where people survive to get prostate cancer than in a
country where under-5 mortality is 200 per thousand. Also, much of the concern
over industrial atmosphere discharge is about visibility impairing
particulates. These discharges may have very little direct health impact.
Clearly trade in goods that embody aesthetic pollution concerns could be welfare
enhancing. While production is mobile the consumption of pretty air is a
non-tradable”.